Economic Good News

The Consumer Price Index has been falling for five months.

Or it could be that a depression in prices means a depression in the economy.

There is also this observation that the valuation of things is now more based on economic realities than pie in the sky expectations. That might be a good thing, but as Mark Steyn warns:

Trying to reverse an old-time "credit crunch" is one thing. But trying to restore systems in which an insanely inflated gain on assets is a permanent feature of life is a fool's errand - I'm thinking not just of the global finance markets but also of more localized phenomena, such as the English property racket.

"TARP" fails a basic truth-in-advertising test. It's not a "Troubled Asset Relief Program". It's a relief program for failed financial instruments that's wound up troubling the assets even futher. By common consent, the first $350 billion of TARP was completely wasted. Secretary Paulson might as well have ordered the Treasury to hurl it out the windows in dollar bills and watch it flutter down into the Potomac and out to sea. At least then, the odd rummy sleeping in the park might have caught a buck or two to buy some industrial alcohol.

Congress, meanwhile, is behaving disgracefully, magically transforming pork into "stimulus" by sticking another three zeroes on the end. Severe asset deflation is just about manageable. Severe asset deflation plus government-mandated prevention of market correction plus out-of-control spending and the eventual return of inflation is a recipe for catastrophe.